Costs in context
When you’re running a business, you know that keeping costs down always needs to be considered carefully when thinking of introducing new benefits for your employees.
The question is, how do you achieve a balance between providing something that’s worthwhile, and not breaking the bank?
When you’re taking that leap of faith to implement something new, you want to be sure you’re getting return on your investment, but you also want your staff to engage with the benefit and appreciate what you’ve put in place.
If you look at the spectrum and associated costs of providing a comprehensive benefits package, and then break it down into the individual costs, you can analyse cost against potential return of a range of benefits a typical organisation might offer. By putting cost into context, the aim is to rationalise why it’s advantageous to put some of the lower cost benefits in place, and to illustrate how your return on investment might manifest in better employee retention and staff wellbeing.
Beginning at the higher end of the spectrum, pensions are by far the most costly benefit that might form part of your employee benefits package. Depending on the type of scheme on offer and the number of people to take it up, a company with 1000 employees can expect to pay over half a million pounds a year to fund their pension scheme.
Another high end benefit is Private Medical Insurance, at the approximate cost of £300 per employee per year.
Though not all companies will offer their staff PMI, an alternative Healthcare Cashplan might cost anywhere between £80 and £170 per head, depending on the cover limits available. And if you offer health insurance on top, at an average of £100 per employee per year, that’s an extra £100,000 for 1000 employees.
Turning now to some of the seemingly inconsequential benefits, the staff Christmas Party alone might cost £40 per head, which continuing with the example company of 1000 employees, equals a total annual cost of £40,000. Complementary tea and coffee for a workforce of the same size is likely to cost even more, with a moderate projection of £50 per employee totalling £50,000 for the year.
After spending over a million pounds annually on the bare essentials detailed above, it’s easy to understand why it can be difficult to embellish your existing offering with further benefits from a budget point of view. Yet by putting cost into context, it may be useful to compare the cost of potential benefits against your existing package when looking to put new ones in place.
Employee discounts are likely to be the cheapest benefit an organisation can provide. At just a few pounds per head, the cost is significantly less than your annual tea and coffee expenditure and can even offset your other costs such as salary, by maximising employees’ disposable incomes.
But there are other things to consider when comparing the relative costs of employee benefits. For a start, which ones will your employees actually appreciate?
PMI, pensions, the Christmas party and tea and coffee are all largely expected and are highly desirable. Employee discounts on the other hand, are always going to be ‘nice to haves’ – not crucial retention or recruitment tools. But, for a few pounds per employee per year, discount programmes are a cost-effective, high-profile, not- taken-for-granted addition to the compensation and benefits package.
In comparison to other benefits, employee discounts are also quicker and easier to implement, with a dedicated account manager available to help you every step of the way with tailoring, communications and usage statistics. A good programme will support your employees with a helpdesk with long opening hours, to deal with any enquiries or issues – further removing any source of burden from HR teams. Pensions and the like are often admin-heavy and can be a somewhat painful process to put in place. And the thanks you receive from employees for going through the process is minimal.
The value for money of an employee discounts programme like Reward Gateway, therefore, is clear to see to the point of almost being too good to be true. The return far outweighs the investment of both time and resource in ways incomparable with any other employee benefit.